Petrol prices hit 4½-year highsPetrol prices
Unleaded petrol price: According to the Australian Institute of Petroleum the national average price of unleaded petrol rose in the past week by 1.8 cents to 157.6 cents a litre – the highest level for over 4½ years (highest prices since the week to January 5 2014).
Across states/territories: Petrol prices rose in six capital cities in the past week. Prices rose most in Brisbane (up 16.7 cents a litre). The discounting cycle ended in Sydney on Friday and petrol prices have lifted to $1.70 a litre in many areas of the city.
Average monthly spending: CommSec estimates that the average household spends $252.16 a month on petrol, up around $30 in the past six months.
What does it all mean?
The wholesale petrol price is currently around 147 cents a litre with diesel around 153 cents. A margin of 10-12 cents has to be added to obtain the retail prices. So motorists can currently expect to pay at least $1.57-1.60 a litre for petrol, abstracting from ‘discounting cycles’.
Both the International Energy Agency and OPEC have trimmed forecasts for global oil demand. And while world supplies of oil are constrained, the expectation is that supply and demand for oil are roughly in balance. Overall, conditions in the global oil market suggest that prices are peaking.
Apart from the supply/demand outlook for crude oil, the other piece of the puzzle for Australian motorists is the Aussie dollar. If US interest rates continue to rise, this would point to a weaker Aussie dollar and the potential for higher local petrol prices. The bottom line is that motorists need to watch the petrol cycle closely and use apps to find the cheapest places to fill up.
Filling up the car with petrol is the single biggest weekly purchase for most families. So a higher petrol price has the potential to trim spending on discretionary or non-essential items. The average household is spending $30 more a month for petrol than six months ago – bad news for cafes, restaurants and fast food outlets. Motorists should get used to paying $1.50-$1.70 a litre for fuel.
Despite the lift in recent weeks, Australia still has the 4th cheapest petrol price of 33 OECD nations.
What do the figures show?Petrol prices
According to the Australian Institute of Petroleum, the national average price of unleaded petrol rose in the past week by 1.8 cents to 157.6 cents a litre – the highest level in over 4½ years (highest prices since the week to January 5 2014).
The metropolitan petrol price rose by 1.9 cents to 157.2 cents per litre, and the regional price rose by 1.6 cents to 158.5 cents per litre. The gross retail margin fell by 1.1 cents to 10.80 cents a litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 3.8 cents to 150.4 c/l), Melbourne (down by 4.3 cents to 154.4 c/l), Brisbane (up 16.7 cents to 166.0 c/l), Adelaide (up by 4.4 cents to 162.7 c/l), Perth (up by 2.3 cents to 157.4 c/l), Darwin (up by 2.9 cents to 161.3 c/l), Canberra (up by 2.5 cents to 162.8 c/l) and Hobart (up by 1.9 cents to 164.1 c/l).
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 147.1 cents a litre, up by 1.3 cents over the week. The terminal gate diesel price stands at 153.4 cents a litre, up by 1.9 cents over the past week.
The national average diesel petrol price rose by 2.9 cents to 163.5 cents a litre over the week. The metropolitan price rose by 2.8 cents to 163.5 cents a litre with the regional price up by 2.9 cents to 163.1 cents a litre.
Last week the key Singapore gasoline price fell by US$3.40 or 3.6 per cent to US$90.10 a barrel. In Australian dollar terms, the Singapore gasoline price fell by $5.85 or 4.4 per cent last week to $126.49 a barrel or 79.55 cents a litre.
MotorMouth records the following average retail prices for capital cities today: Sydney 153.7c; Melbourne 152.8c; Brisbane 167.8c; Adelaide 158.6c; Perth 151.2c; Canberra 165.3c; Darwin 162.8c; Hobart 163.4c.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
What are the implications for interest rates and investors?
In the September quarter, petrol rose around 1.5 per cent after lifting 6.9 per cent in the June quarter. So higher fuel prices are adding to inflation directly (at the pump) and indirectly (through transport costs).
The Reserve Bank knows that higher petrol prices add to inflation as well as potentially constraining spending. So the lift in prices at petrol pumps could slow the economy as well as boosting inflation. As a result the lift in petrol prices is unlikely to have implications for rates. The Reserve Bank will, however, closely watch the two seemingly opposite forces acting on rates.
CommSec expects interest rates to remain unchanged until late 2019.
Published by Craig James, Chief Economist, CommSec
Petrol prices hit 4½-year highsPetrol prices